Polish Secret Services to Prod State Companies as Minister Exits
(Bloomberg) -- The head of Poland’s secret services ordered a review of contracts made since last year by 66 state-controlled companies as Prime Minister Beata Szydlo dismissed the minister in charge of their oversight amid accusations of cronyism.
Government ministers supervising the biggest state-run enterprises, including utility PGE SA, lender PKO Bank Polski SA and insurer PZU SA, were asked on Thursday to provide by the end of this month information on all contracts, including those with legal, security and marketing companies, since start of last year, Stanislaw Zaryn, a spokesman to Special Services Coordinator Mariusz Kaminski, said by phone on Friday.
Szydlo fired Treasury Minister Dawid Jackiewicz, who personally oversaw a flood of appointments to the management and supervisory boards of many state-controlled companies, as part of an earlier announced plan to phase out his ministry, she said on Thursday. The first reshuffle in the 10-month-old cabinet came four days after Jaroslaw Kaczynski, the influential leader of the ruling Law & Justice party, called for the end of “abusive behavior” and cronyism at state-run companies.
“These are routine actions, we want to have everything under control,” government spokesman Rafal Bochenek told reporters about the secret services request. Minister Kaminski will analyze the information he receives in the probe and decide whether further action is needed, his spokesman told Bloomberg News.
Jackiewicz’s departure “probably means changes in the management boards of state-controlled companies” that he oversaw, Bartlomiej Kubicki, a Warsaw-based analyst at Societe Generale SA, said by phone. “And frequent management changes are always worrisome for investors.”
Warsaw’s WIG20 Index, which includes 11 state-controlled companies, dropped 0.5 percent at 12:27 p.m. in Warsaw, the worst showing among 17 primary equity gauges in European developing markets on Friday. Since Law & Justice won parliamentary elections in October, the WIG20 has dropped 18 percent, while the MSCI Emerging Market stock index gained 2.2 percent in zloty terms, according to data compiled by Bloomberg.
“The never-ending changes in the main plans for state-controlled companies, mostly visible in the case of power utilities, make any estimation of their real value very difficult,” said Jaroslaw Niedzielewski, the chief investment officer at Investors TFI SA, a mutual fund in Warsaw. “Investors can’t see clear perspectives and will continue to demand lower prices for such shares. I’m afraid that we will keep bearing the cost for the unpredictability for some time.”
Szydlo’s aide, Henryk Kowalczyk, will take over the oversight of the Treasury’s liquidation, expected by the end of 2016. The premier said she’s awaiting his recommendation for the supervision of the three biggest companies that Kowalczyk will oversee: insurer PZU SA, copper miner KGHM Polska Miedz SA and chemicals maker Grupa Azoty SA.
“Minister Jackiewicz has fulfilled his role” to prepare a plan for shutting down the ministry, Szydlo told reporters on Thursday. “We need such supervision over state-run companies that we can be assured this property is managed well and that all pathologic actions, which had accumulated there over years, finally end.”
The ruling Law & Justice has replaced scores of executives with party loyalists as it tries to remake the economy and state administration. Jackiewicz said during a March parliamentary debate that “loyalty is one of the criteria” for hiring new managers, who must “identify themselves with the ruling party’s economic program.”
The corporate revamp included handing Wojciech Jasinski, a Law & Justice lawmaker and one of Kaczynski’s closest allies who has no experience in a large corporation, the post of Chief Executive Officer in PKN Orlen SA, an oil company with 88 billion zloty ($23 billion) in annual sales. Yet the oversight process over state companies was criticized by Kaczynski at a weekend meeting of the Law & Justice party.
“There is abusive behavior, including referring to knowing me while applying for jobs.,” Kaczynski told reporters on Sept. 11. “We need to deal with them with a strong arm. We need to correct some decisions and I hope the government will do it.”